Clearing old leases
I have been working on obtaining releases for leases which have expired. As I worked on this problem, I have come up with a few problems.
1st problem:
Landowner signs lease with A, A subsequently assigns the lease in its entirety to B. A is no longer in business, and the lease terms have expired. The lease is not held by production, and there has been no activity for 13 years. The question is, do I need a release from A?
2nd problem:
Landowner signs lease with A, A subsequently assigns a working interest or royalty interest to B. A is still in business, B's business status is unknown. The lease's status is the same as the 1st problem. The question is, do I need a release from B, or is his interest extinguished upon securing a release from A?
3rd problem:
Landowner signs lease with A, A combines a group of leases and uses them as collateral for a line of credit with B. A mortgage of the group of leases was recorded. The lease's status is the same as the 1st problem. The question is, do I need to get a release of the mortgage from B?
I ask these questions, because this process can become expensive. I have had one company willing to sign a release for it's working interest assignment. The recorder fee was $67.00. If I follow the example at a Buckeye minerals meeting, where a lease was assigned 88 times the recording fee would be $5,896.00.
What are your thoughts?
Views: 3514
Replies to This Discussion
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Permalink Reply by james mcmeechan on
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Marcus, yes you understood faster than I did, I had to listen several times. She also relies on the section below. She states when you file your affidavit after 30, but before 60 days nothing can be noted because the lessee has 60 days to file. in using microflim, they are not able to actually note in a margin. they put a label on your affidavit. Since your affidavit was returned to you by mail, you will need to return it apply a label and file it again. I did ask what would happen if I filed at the close of business on the 60th day. It would be too late for the lessee respond, they would have my affidavit in hand, they could apply the label, and record. She said she did not know if that would work. It was then, I decided to proceed with the clipping. I will discuss it again when I go back.
"In a county in which the county recorder has determined to use the microfilm process as provided by section 9.01 of the Revised Code, the recorder may, where applicable, require that the notation “This lease cancelled pursuant to affidavit of forfeiture recorded in Lease Vol. . . ., Page . . . .” be entered on the affidavit, and that the affidavit be recorded in the record of leases provided for by section 317.08 of the Revised Code. The recorder shall charge the fee for such recording as provided by section 317.32 of the Revised Code for the recording of deeds. The record of the lease is not notice to the public of the existence of the lease or of any interests therein or rights thereunder and the record shall not be received in evidence in any court of the state on behalf of the lessee, his successors or assigns, against the lessor, his successors or assigns.
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Did not know they used microfilm. That clears it up. Glad to see that 1920's technology is still big in Ashtabula.
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Marcus, when I was reading your post I remembered this section. As it says may and not shall, I wonder what would happen if I just waited until the 60 days expired to file. What do you think? I will ask when I go back next week.
After thirty days and not more than sixty days from the date of proof of mailing or publication of the notice, the lessor, his successors or assigns, may file with the county recorder an affidavit of forfeiture setting forth that he is the lessor of an oil or gas lease; the volume and page of the lease record where the oil or gas lease is recorded; that the lessee, his successors or assigns, has failed and neglected to comply with specifically described covenants provided for in the lease, reciting the facts constituting such failure, or that the term of the lease has expired; that there are no producing or drilling oil or gas wells on the leased premises; that the lease has been forfeited and is void; and that notice was served on the lessee, his successors or assigns, or publication made and the manner and time thereof.
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You have to file it by day 60. Otherwise the clock starts ticking again and you have to send notice again and wait another 60 days.
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Permalink Reply by Ronaround on -
THIS IS ALL GOOD INFORMATION.
I know we need to do our homework to clean the leases up, if and when this may happen. As it was stated a tied up lease is as good as no lease.
Ashtabula County, especially lower portions had lots of wells starting in the late 60's. add to that assignments and owner change and there you have 30 plus assignments.
And your correct, most are gone but need wiped from the books.
please keep the information flowing!
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These are not "OH only" problems. It would be useful for knowledgeable posts to sign on from the other Marcellus states. They have all been in the drilling business for over 150 yrs., and many lease entanglements exist.
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Permalink Reply by Finnbear on
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The solutions will be OH specific because of OH state law on O&G leases though...
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Ohio has been drilling for about 100 years +. We're no strangers to this sort of thing.
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I have been a member of this site for a while, and have used information gleaned from the Ashtabula section as well as the general section. This was however, my first post. When I stated my problems, I was not expecting legal advice. I was hoping someone had a similar experience, and could describe how they resolved it. I find it curious, that no one responded directly to an item in the problems. Don't get me wrong, most of the posts contained information which I am now using, or led me to explore other options. I just find it curious no one responded with their experience. Am I the only one attempting to do this without a lawyer? Even with a lawyer, you would, in some instances, be required to publish in the paper. with all the activity, I assumed the paper would be full of notices, I have seen none. This makes me wonder if a easier method exist.
let me relate my experience so far. The problems I have encountered may help someone, or produce more discussion.
I learned from this site, a title guaranty, is a good way to find encumbrances on your property. Because of the way I obtained my property, I have 4 separate title guarantees. They are not the same. Even though all the encumbrances existed at the time the guarantees were issued, all of the encumbrances do not show show up on all the guarantees. No assignment of a working or a royalty interest showed up on any title guarantee. So while a title guarantee is a good place to start, it may not be all inclusive.
On to the recorder's office. The Ashtabula county recorders files consist of 3 separate and distinct sets of records. You must check each one. One is from the beginning to 1947 (not one hundred percent sure of that date), one is from 1947 (again not sure) to 1984, and the last is from 1984 to the present time. If you have a lease that changed hands by merger or acquisition, it's not going to show up. I'm still working on a solution to this problem. When using the indexes check different spellings and variations of names. While tracking a lease for POI, which stands for Park Ohio Industries, I looked in the book containing names starting with po. The book contained nothing for POI. I decided to see if it was listed under Park Ohio Industries, even though the lease stated POI. There in a different book for names spelled with pa was a listing, not for Park Ohio Industries, but a lessee named POI. I will say the people who work there are all friendly, and quite willing to help.
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You mention publishing in the paper. That's an action used for mineral reservations. If you're just trying to clear an old lease that has no production you don't publish anything. Under 5601.332 the prudent operation is to notify the old Lessee.
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Marcus, I hope 5601.332 is a typo, I was not able to find it. Under 5301.332 as highlighted below, publishing in a paper is required if your certified letter was refused, or not able to be delivered. I plan to publish for leases where the company is no longer in business.
"or if service is not obtained by certified mail, by giving notice by publication at least once in a newspaper of general circulation in the county in which the land is located of the lessor’s intent to declare the lease forfeited.”
There is a affidavit of noncompliance or payment of rentals. I do not know its ORC number, and have never read it only saw it here on the comment wall.
I am not familiar with the rules for posting on this forum, your last response to our first conversation did not have a reply button, so I will reply here. What part of 5301 do you feel imposes the duty to file on or prior to the 60th day. The statute states, may, I don't see that as imposing an absolute duty. I see an absolute duty for the lessee to file in 60 days, but I don't see one for the lessor. even under the, may file portion, it is not described as preserving any rights. I always thought it strange the lessor would file after 30 days when the lessee had 60 days to file a release or his claim the lease was still good. The issue will not be settled until the lessee responds or does not respond in the 60 days. It makes no sense for the law to force me to proceed when the issue is not settled. I will talk to the recorder when I go back. Thank you sir for your input.
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